Case Note & Summary
The matter arose from an order of the High Court of Rajasthan dated 24-10-1996 in Revision Petition No.715/96, which granted an injunction against M/s. Lloyd Electric Engineering Ltd. The appellants, Dr. Rajeshwar Kumar Malhotra and S. Srinivasan, along with the company, challenged this order before the Supreme Court by special leave. On 26-11-1996, the Supreme Court found no substance in the appeal regarding the injunction against the individual petitioners but granted one week's time to the respondents to address the modulation of the injunction against the company. Subsequently, on 20-12-1996, the Supreme Court considered the changed circumstances. Shri Soli J. Sorabjee, appearing for the company, stated that the two individuals had resigned from their respective posts and were no longer continuing in the company, and that the shareholding pattern of different groups was varied. The Court found force in this contention. Shri Harish Salve, for the respondents, argued that the bank had granted a loan with a condition that the two individuals would continue to work in the company, making the resignation a make-believe show to avoid injunction. The Court rejected this contention, observing that as on today there was no justification for the argument. The Court held that the injunction against the company was not warranted and dissolved it, while granting liberty to the respondents to approach the trial court if the two individuals were found to still work for the company in any form or manner. The appeals were accordingly allowed with no order as to costs.
Headnote
A) Civil Procedure - Injunction - Dissolution on Changed Circumstances - No specific Act or Section cited - The High Court had granted injunction against the company; subsequently the two individual directors resigned and the shareholding pattern varied; the Supreme Court found that no injunction could be granted against the company due to the changed circumstances - Held that the injunction against the company was not warranted and dissolved it, granting liberty to the respondents to approach the trial court if the two individuals still worked for the company in any form (No paragraph numbers). B) Civil Procedure - Injunction - Bank Loan Condition as Ground for Continuing Injunction - No specific Act or Section cited - The respondents argued that a bank loan condition required the two individuals to continue working in the company, making the resignations a make-believe show; the Supreme Court found no justification for that contention as on today - Held that the bank loan condition did not justify continuation of the injunction absent current association of the individuals with the company, and the appropriate remedy for respondents was to seek relief from trial court if the individuals were found working in any manner (No paragraph numbers).
Issue of Consideration
Whether the injunction granted by the High Court against the company was justified given the changed circumstances of resignation of the two individual directors and varied shareholding pattern; Whether the bank loan condition requiring the two individuals to continue working in the company was sufficient to maintain the injunction against the company
Final Decision
The appeals were allowed. The injunction order granted by the High Court against the company was dissolved. The respondents were given liberty to approach the trial court for appropriate relief if the two individuals were found to still work for the company in any form or manner. No order as to costs.
Law Points
- Injunction can be dissolved on changed circumstances
- resignation of directors and varied shareholding pattern alter basis for injunction
- bank loan condition requiring individuals to continue not sufficient to maintain injunction
- liberty to approach trial court for appropriate relief if individuals still work in any form
